Microsoft appeals decision in “Vista Capable” lawsuit

Microsoft has filed both an appeal and a motion to stay in response to a court …

Microsoft has filed its responses to District Court Judge Marsha Pechman's decision that allowed the "Vista Capable" lawsuit to proceed as a class action. The company is taking a two-pronged approach to the issue, and has requested a stay on the investigation from Judge Pechman while simultaneously appealing the merits of her decision to the United States Court of Appeals for the Ninth Circuit.

Microsoft's appeal to the Ninth Circuit focuses on two issues. First, was the District Court correct in ruling that Microsoft is a Washington citizen and that Washington State law therefore governed all of the individual class-action suit members' claims against Microsoft? Only one of the two plaintiffs who originally brought the suit is actually from Washington, and Microsoft itself is not in the business of selling PCs.

Microsoft also asks the appeals court to consider whether or not the price inflation theory that forms the basis of the plaintiff's complaint is valid. According to the plaintiffs, Microsoft's "Windows Vista Capable" campaign inflated demand (and therefore the price) of Windows Vista Capable systems, but they have proposed no method for how the alleged price inflation could be tallied, verified, and demonstrated to have impacted individual class members.

Microsoft's filing with the district court is a straightforward request for a stay on the class-action lawsuit while the company appeals the decision to the Ninth Circuit. The reasoning behind the request is simple. If the Court of Appeals rules in Microsoft's favor, the plaintiff's case will be dismissed or will not be able to proceed as a class action. If the court rules in the plaintiff's favor, the case will continue, but the two issues Microsoft raises with the Court of Appeals will have been resolved.

Microsoft also appears to be concerned about potential business disruptions that might occur if the class action suit goes forward only to be halted at a later date. "The balance of hardships tilts sharply in Microsoft s favor: continued proceedings here would cost Microsoft a substantial sum of money for discovery and divert key personnel from full-time tasks; would intrude on sensitive pricing decisions and strategies by OEMs, wholesalers, and retailers; and would jeopardize Microsoft s goodwill with class members all with respect to claims that might not proceed on a class basis at all," according to the software giant's filing.

It's not hard to see why Microsoft is keen to limit the amount of scrutiny it's forced to undergo. The bundle of company e-mail we discussed last week, while only a tiny fraction of total company communication during the relevant time period, contained the embarrassing revelation that Microsoft had gone back on its own word to HP regarding what Intel chipsets would and wouldn't be supported in Windows Vista. If the case goes forward, Redmond could end up being forced to air more dirty laundry.